- Gold Price rebounds, as bears bide time before next push lower.
- Risk flows temporarily down the US dollar while recession fears lurk.
- XAUUSD still targets rising channel target at $1,722 despite oversold RSI.
The FOMC June meeting’s minutes published read hawkish and put a fresh bid under the US dollar in American trading on Wednesday. The Fed minutes revealed that the board members remained worried over inflation becoming more entrenched, and therefore, “warranted moving to a restrictive stance of policy, and they recognized the possibility that an even more restrictive stance could be appropriate if elevated inflation pressures were to persist.” Amidst unrelenting buying interest around the dollar, Gold Price was smashed to a nine-month low of $1,732. The greenback was already a preferred safe-haven asset, as recession fears amplified but the hawkish Fed minutes bolstered its demand. The impressive rebound in the US Treasury yields also exacerbated the pain in the bright metal, as the minor upturn in Wall Street indices failed to impress XAU bulls. In the aftermath of the Fed minutes, the CME FedWatch Tool showed that markets price in a 94% chance of a 75 bps rate hike in July vs. 84% expected on July 5.
Gold Price is attempting a minor recovery towards $1,750, as the improvement in risk sentiment has fuelled a decent pullback in the dollar across its main peers. The recent strength in the US rates warrants caution for bulls, as they firm up ahead of Friday's labor market report. Risk flows returned, as markets stabilize after two days of intense volatility amid rife recession fears, surging gas prices and political instability in the UK. Investors reassess recession risks amid signs of peak inflation ahead of the critical US employment data. The US ADP jobs data is suspended to be released all through the Summer, as the company implements a new methodology. Hence, speeches from Fed and BOE officials will be closely followed.
Gold Price Chart: Daily
On the daily chart, gold price remains on track to challenge the rising channel target aligned at $1,722, as the latest bounce is only seen as temporary.
The renewed upside in the metal could be attributed to the oversold conditions on the 14-day Relative Strength Index (RSI), which is currently at 28.40.
The ongoing road to recovery could be immediately capped by the $1,750 psychological level, above which a fresh upswing towards the powerful hurdle around $1,775 cannot be ruled. That level is the confluence of the January 28 low and the previous day’s high.
If sellers regain control, then the $1,700 mark will be at risk on a sustained move below the abovementioned crucial support at $1,722.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended Content
Editors’ Picks
EUR/USD regains traction, recovers above 1.0700
EUR/USD regained its traction and turned positive on the day above 1.0700 in the American session. The US Dollar struggles to preserve its strength after the data from the US showed that the economy grew at a softer pace than expected in Q1.
GBP/USD returns to 1.2500 area in volatile session
GBP/USD reversed its direction and recovered to 1.2500 after falling to the 1.2450 area earlier in the day. Although markets remain risk-averse, the US Dollar struggles to find demand following the disappointing GDP data.
Gold climbs above $2,340 following earlier drop
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.
After the US close, it’s the Tokyo CPI
After the US close, it’s the Tokyo CPI, a reliable indicator of the national number and then the BoJ policy announcement. Tokyo CPI ex food and energy in Japan was a rise to 2.90% in March from 2.50%.